What is her apc, Basic Statistics

The life-cycle hypothesis is based on the assumption that people try to smooth their consumption over their expected adult lifetimes.  Suppose Tammy expects to live for another T years and expects to work for R years and earn an annual real income of Y dollars per year.

Tammy will then retire for (T - R) years, and she wants to smooth her annual consumption C and also plans to spend her entire lifetime earnings (R x Y) over the remaining T years.  This could be expressed as:

C x T = R x Y.

Note that in class I would have expressed this as:

C x NL = WL x YL

Where NL represents the number of years of life remaining, WL the number of years of working life remaining, and YL the annual real income per year over the WL years of work.

a.  Suppose Tammy begins working at age 20, intends to retire at age 65, and expects to live until age 80.  If Y = $40,000, what is Tammy's annual C?  What is her APC?  Her APS?

b.  Now suppose Tammy begins her adult life with an initial wealth level equal to W.  Consequently, the total amount she will now have available to spend during her lifetime will be

(R x Y + W).  If Tammy still wishes to smooth her consumption, then:

C x T = (R x Y) + W

Suppose that W = $120,000 and Y = $40,000.  What is Tammy's annual C under these assumptions? 

c.  Assume now that Y rises to $80,000 and W remains equal to $120,000.  What is the MPC out of income (Y)?  What is the APC out of wealth (APCW)?

Posted Date: 2/21/2013 8:07:34 AM | Location : United States







Related Discussions:- What is her apc, Assignment Help, Ask Question on What is her apc, Get Answer, Expert's Help, What is her apc Discussions

Write discussion on What is her apc
Your posts are moderated
Related Questions
Progect Guid: PROJECT 1: SIMPLE DATA ANALYSIS & COMPARISON REPORT GUIDELINES This document contains general guidelines for the preparation of the Project Report I. Please note,

Please show your work to receive credit for this question.. Harkin Electronics is planning its production next quarter for its two product lines, relays and capacitors.  The pro

i) For a 3 term averagin filter, write a difference eqatuon governing the filter and dervie the corresponding z transform Sketch a pole zero plot, would this filter be stable, why

foster company makes 20000 units per year that in uses in products it manufactures

The skewness is a measure of asymmetry and it is positive at 0.15 meaning that it is greater than zero which reveals that the tail extends to the right slightly indicating the dist


What happens to the arithmetic mean when you add the same number to all the scores of the distribution?

How to calculate closing stock in Tally while we are posting with inventory.

How to calculate manually Cronbach alpha

There are 49 mice in a pet shop. 30 mice are white. 27 mice are male. 18 mice have short tails. 8 mice are white and have short tails. 11 mice are male and have short tails.